Sat 12 Aug 2006
It’s probably too soon to post this, but if I wait to finish my other REIT post then the moment will pass. REIT’s peaked this week and I sold 50% of my REIT holdings on 8/9 (my Tasgall post on the 10th covered this decision). Since then REIT’s have been really hammered and are starting to go what will be a correction at best and a “recession” in the REITs at worst. Their 4+ year run up that at least doubled the REIT market’s value (while halving it’s yield) is likely at an end. I believe that it lasted almost a year longer than it should have. Last Sept I halved my REIT position after things looked just as bad as they do today, only to see things get startlingly better by Dec, so I beefed my position back up again. Now, things are just turning south and I believe that they will continue to do so.
My recent 50% sale was based on the belief that I am right about REITs, and the 50% that I’m still holding is based on the fact that I’m still unaware of all the factors that influence REITs. Plus, it’s nice to have some REITs mixed into my asset allocation and I’ll be purchasing more REITs via dollar-cost-averaging over the next several months to slowly buy back up on the way down. I still like REITs for the long term, but right now they have hit a very rough patch.